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China's geographical distribution of plastics products production in 2011 (Figures in kilotons)
China's geographical distribution of plastics products production in 2011 (Figures in kilotons)
In 2011, China plastics processing industry achieved significant growth overall. However, affected by international economic downturn and domestic inflation, enterprises in China faced shrinking profit. The business environment is difficult and China is in urgent need to boost domestic demand.

In the beginning year of the 12th Five-year Plan, China's economy maintained relatively fast growth and exhibited outstanding performance in every aspect. However, the international economic downturn and domestic inflation have raised uncertainties that hit China's export. Plastics processing enterprises saw drops in revenue. They can only survive if the Chinese government increases its effort in boosting domestic demand.

According to the data of China's National Bureau of Statistics (NBS), plastics products produced by enterprises above designated size last year reached 54,743.1 kilotons (kt), up 22.35% year on year; 8,436.4kt of plastics film were produced, up 11.17% year on year. By category, output of agricultural film totaled 1,467.8kt, up 14.49% year on year; production of plastics foam reached 1,411.6kt, up 25.38% compared with 2010; 2,402.6kt of artificial and synthetic leather were produced, up 9.57% year on year; 4,583.7kt of consumer plastics were produced in 2011, up 5.26% year on year; output of other kind of plastics totaled 37,908.8kt, up 28.59% year on year.

Largest production bases remain in Guangdong and Zhejiang

In terms of geographical distribution, Guangdong and Zhejiang maintained their status as China's largest and second largest production base, recording 10,740kt and 8,460kt of output respectively.

In terms of product types, Zhejiang's plastics film output ranked first in the country, accounting for 31% of total production in China; Shandong remained as the largest agricultural film producer, accounting for 23% of total output; Guangdong ranked first in plastics foam output, accounting for 42% of China's total production; artificial and synthetic leather production mainly based in Zhejiang, accounting for 44% of total output in the country; Production of consumer plastics products mainly located in Guangdong and Zhejiang, accounting for 28% and 22% respectively; output of other kind of plastics products centered mainly in Guangdong, accounting for 19% in the country.

According to China National Light Industry Information Center (CNLIIC), in 2011 the total output value of enterprises above designated size in plastics industry recorded RMB1,607.98 billion, up 27.5% year on year, among which include 1,374 plastics films enterprises that produced RMB212.97 billion, up 28.1% year on year; 2,323 plastics sheet, pipe and profile enterprises that generated RMB381.17 billion, up 30.1% year on year; 1,733 plastics filament, rope and braid products enterprises that reached RMB191.17 billion in value, up 36.1% year on year; 1,731 consumer plastics enterprises produced RMB182.07 billion in value, up 24.1% year on year.

Revenues of enterprises above designated size rose significantly

CNLIIC also revealed that enterprises above designated size in plastics industry generated RMB 1,398.77 billion revenue from main operations, up 27.73% year on year; RMB108.24 billion of profit tax were recorded, up 28.8% year on year; total profits were at RMB73.83 billion, up 29.32% respectively.

Although major enterprises recorded good results last year, there were more companies suffering from losses. A total of RMB4.351 billion losses were recorded by them, the percentage rose by a staggering 43.65% compared with 2010. Meanwhile, the average number of employees in enterprises above designated size was 2.43 million, up 8.73% year on year.

Most of the growth rate however, were lower than what were achieved in 2010, in particular profit growth witnessed substantial decline while a higher percentage of enterprises suffered from losses. Nevertheless, the prospect of plastics processing industry still looks good.

According to CNLIIC, in 2010, the sales value of plastics processing industry recorded RMB1,576.48 billion (current price), increased by 27.5% compared with 2009. Sales rate was at 98%. Export value was RMB227.67 billion, up 9.8% year-on-year. Export volume accounted for 14.4% of total sales, dropped by 1% compared with previous year (15.4%).

In the plastics processing machinery industry, there were 330 enterprises above designated sizes, which produced RMB46.75 billion output value, an increase of 16.4% year on year; 240,000 units of equipment were manufactured by them, down 4.31% year on year; 38,000 units of those were exported at RMB1.079 billion, both figures increased by 12.09% and 30.12% year on year respectively.

US$39.3 billion of plastic products were exported in 2011

In 2011, according to China Customs statistics, export value of the country's plastics products were US$39.3 billion, while US$18.6 billion in value were imported.

China's key plastics products production in 2011 (Figures in kilotons)
During the 11th five-year plan period, the plastics industry witnessed its fastest growing era, maintaining 20.1% annual growth in production volume and 22.34% in annual growth in output value. In 2010, the total production value of China plastics industry accounted for 3.55% in GDP and 10.27% in the light industry, making it the No.1 sector in the light industry. Moreover, profits of the plastics industry more than doubled by the end of the 11th five-year plan, as export volume hitting 14,620kt at US$36 billion, accounting for around 10% of total light industry export.

Plastics processors lack innovation and technology

Currently, China has become the largest plastics product producer and consumer in the world. In 2010, apparent consumption of plastics products in China accounted for 25% of the world. The per capita consumption of plastics was 46kg, slightly higher than the world's average of 40kg. The plastics industry also made great progress in energy saving and accomplished the governmental target in advance to reduce the unit GDP power consumption by 20%.

However, several problems exist in the industry:

1. Lack of innovation, in particular, small and medium enterprises remain at low level in terms of technology.

2. Current equipment quality is inadequate to meet the needs for future development.

3. Irrational product structure with relatively high percentage of medium and low-end products. Particularly, some sectors such as plastics weaving face severe challenges.

4. Irrational regional distribution. Though the central and western regions achieved fast growth in the 11th five-year plan period, yet they are still substantially lagging behind the eastern provinces.

12th five year plan a golden opportunity to raise industry standard

According to Qian Guijing, Director of China Plastics Processing Industry Association, the 12th five-year plan period is critical for the plastics processing industry to grow by leaps and bounds. It is an important stage to transform the current development model, adjust and optimize the industrial structure, improve the quality of development, and raise the overall capacity of the industry towards high-end market.

During the 12th five-year plan period, China's plastics industry should seize this historic opportunity to promote technical advancement and innovation to develop a strong foundation for the future upgrade towards the high-end market. In 2010, total production of the plastics processing industry accounted for 3.35% in GDP, way behind the generally recognized target of 5%.

Obviously, this industry still has not become a backbone in national economy. That said, the up rise of plastics processing industry has improved its position in China and is speeding up the process to become one of the backbone industries in national economy.

Source: China Plastics Processing Industry Association

Significant change in China's statistics approaches

Two changes in statistics approach in 2011 are noteworthy.

First of all, in February 2011, National Bureau of Statistics modified the product directories of plastics industry. Afterwards, overall volume of plastics products remains unchanged but in product classification, several categories of plastic products such as plastic panels, sheets, plastic pipes and accessories, plastic rods and profiles, plastic filament, ropes & braids, and plastic cartons and containers were abolished.

Secondly, in February 2011, National Bureau of Statistics raised the criteria of annual sales income for enterprises above designated size from RMB5 million to RMB20 million.
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